Critical of the market's reaction to the 'no new QE' news, Biderman and Bianco wholeheartedly believe yesterday's plunge was entirely due to the fact that the 'Bernanke Put' - that we have become so conditioned to expect - did not appear at the levels many expected. Despite a federal deficit of $100 billion per month, it seems the Fed is now in agreement with Biancerman that US growth is limping along at best but notably Jim Bianco believes the fiscal cliff will end up more of a bump in the road as he sees politicians being forced to agree to extend or roll-back (maybe at the very last minute) offsetting the abyss. However, with the debt ceiling looking like it will be hit before the election, it will be interesting to see what political parlance is used if-and-or-when Geithner borrows from the trust funds to keep the government going this time (or not). Positive on Gold longer-term, Bianco sees it like other markets: "Gold is a junky that has not got its money fix" and the only reason to believe Gold is a sell is if you think CBs are done - they are not! Finally the two discuss the fact that 'nobody wants to be bearish anymore' when looking at sentiment surveys - setting up a 'trap-door' for the market.

The discussion of sentiment and the fascinating psychological shift to an aversion to bearishness starts at 4:20:

Ben Stein: The real news is that Goldman Sachs, a huge investment bank, says it’s time to short the S & P. But, wait… a couple of weeks ago they said a strong recovery was in the offing. And their chief investment guru, Abby Joseph Cohen, recently said stocks were the only thing to own. So, what made GS change their minds? The Eurozone crisis is not new. Fragility in the whole western world is not new. The looming slowdown in China is not new. What’s new? Someone at a trading post at GS said they could make a lot of money if the firm issued a pessimistic warning and in the meantime Goldman had gone short in a big way."

It is dangerous logic. Gold isn't what needed the money fix. It is the place money goes when the things that need a money fix don't get a money fix. Currently, it is the bond bubble that needs a money fix.

Not just that - if you are in debt, you can't get out of it. If you are rich, you can. There are a million legal loopholes out there for getting out of debt, but poor people don't have access to the lawyers they need to get out of debt. My advice: if you have a lot of debt, save up about $5000 and get a good lawyer, don't pay your credit card bills with money, pay the retainer. One phone call from the right guy and that debt is abolished. Immoral? Absolutely not. Slavery is immoral

There may be a Bernanke Put, but that also means there is a Bernanke Premium. In stocks, all premiums must eventually be worked off. The Bernanke Premium means that stocks are at least 15-20% over-valued.

I wonder how gold bullion prices ever became dependant on the Federal Reserve doling out money? Gold prices advanced for years under intense bearish raids by the bullion banks and still managed to keep a steady yearly advance. TrimTabs are gold bears and skeptical of the bull market.

Bernanke announced that they would keep long term interest rates low, which by now have fallen so far behind inflation, the only place you can put money with a reasonable safety guarantee is into bullion, as it stores value under the circumstances.

Gold prices corrected during London trading hours, in typical fashion. This was a central bank price intervention which has more to do with the UK and its problems than bullion banks painting the tape. A $40 correction into a rising price trend does not a bear market make, or a sign of speculative frenzy.

If anything bullion banks selling gold leases into the market are becoming a strategy which necessarily needs a taxpayer funded prop(UK) in order to occur at all. With time, these corrections have become less and less significant.

I would assume the dependence occurred as soon as paper metal was created. I also assume that the price of physical is completely dependent And separated from paper by an amount equal to the buyer's sentiment for the future.

It is a bell curve. The same thing that is making people sell gold short term now, will make them load the boat on the other end of the curve. Nothing is linear. It is about global money flows. Selling the USA includes gold and means buying somewhere else, once the check clears. In this environment, I expect gold to do just fine.

Money is flowing out of the USA wholesale that includes gold short term. Paper gold sold in the USA will be bought in other countries 24 hours later. They just don't want it here. And if they buy physical instead of paper at the end, prepare for the tidal wave.